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Technopreneurship and theEarly Stage Ecosystem in China

Chris Evdemon ( 易可睿 )General Manager – Incubation Programs, Innovation WorksPrincipal, Innovation Works Development Fund (IWDF)Director, Business Angels Network South-East Asia (BANSEA)Founding Member, China Business Angels Network (CBAN)

April 2011

What does a start-up entrepreneur need?

Market … A big enough market with major growth opportunities.

Entrepreneurship … Talent, drive, skills and ideas – all widely available.

Incubation … Real ‘turnkey’ services for start-ups.

Early Stage Investors … A community of angel investors and early stage VCs.

Innovation … A culture of innovation.

An early stage

Ecosystem

Ecosystem

What makes Silicon Valley so special?

?

© Aydin Senkut

Why is Silicon Valley important to China?• Constant inflow of ideas, know-how, best practices, talent, investment professionals, etc.

Ecosystem

Chinese Economy: a unique and amazing story

• From any current perspective, China has an awe-inspiring future ahead of it.• In the next 2 decades it will surpass the U.S., attaining an economic dimension

unparalleled in history.• Growth will be based on its massive new and richer generation of Chinese,

emerging from the country’s ever-growing urban areas.• Unlike Japan, China is likely to fulfill its enormous expectations.

Macro

A strong middle class has been emerging …

Macro

Retail sales (i.e. consumerism) are booming …

… in the midst of the financial crisis!

Macro

• Most traditional consumers are still predominantly price sensitive and initially have a sense of mistrust for anything new.

• Most consumers do not care about brands, although more and more people are starting to have brand awareness.

• The consumer market is still very fragmented for most product / service categories.

• Top tier cities (e.g. Beijing, Shanghai, etc.) are already becoming expensive and very competitive. The ‘new’ potential is in 2nd and 3rd tier cities.

• Emerging middle class has only just started to pay attention to lifestyle, such as e.g. diet, fitness, beauty, travelling, etc.

• Women have recently started to buy accessories, cosmetics, fancy lingerie, etc. in order to enhance their sense of well-being and self-respect.

• “Newly rich” social class phenomena.

But there is a unique set of challenges …

Macro*

• Market research and other statistical information is usually unreliable …

… “there are lies, damned lies and Chinese statistics!”*

But there is a unique set of challenges …

Macro** Quote from a foreigner-facing tech blog.

China’s New Digital Generation – a social phenomenon

• “One Child Policy” (80 后 and 90 后 generations), today in the age range of 12 - 31 years, are ‘obsessed’ with the internet, extremely curious but still somewhat suspicious of most online content.

• Beneficiaries of the “Reform” and opening up policies, today in the age range of 32-41 years of age, easily grasp the opportunities provided by the internet and enjoy its diversity.

• The age range of 41+ years old typically do not adapt to digital services easily and usually just use simple mobile voice services, SMS and some news services.

• In China, there are not many alternatives for affordable entertainment.• The media / music / cinema industries are still in their infancy and tightly controlled.

• Internet is thus filling a gap.

• A distinct Chinese Internet pop culture has been on the rise and is very influential.

Macro

Mobile + E-Commerce: Catalysts for the third wave of the Chinese Internet

2nd Wave 3rd Wave Mature Market1st Wave

Web portals in late 1990’s created the first boom.

MOBILE INTERNET

E-COMMERCE

ONLINE GAMING (casual, mobile, social)

CLOUD COMPUTING

Major Opportunities

Technology companies Baidu, Tencent, Shanda rose from the ashes of dot-com bust.

We anticipate an explosive third wave propelled by Mobile Internet, E-commerce, Online Gaming and Cloud Computing.

Sina $5.63B

Sohu $3.18B

NetEase $5.87B

Tencent $50.08B

Baidu $42.60B

Shanda $1.98B

Giant $1.71B

Perfect World $1.12B

Valuation of Listed Companies (as of March 16th, 2011)

Internet

Lucrative space reserved only for locals!

Challenges of multinational giants:

• Too short-term profit focused;• Local team not empowered;• Inflexible and slow;• Insufficient attention to local market

needs:• “Global” product mentality; • No willingness to tailor for China.

• Yahoo: entry in 1999, 3721 acquisition in 2003 (40% market share), now 0.5% share• eBay: entry in 2003, Eachnet acquisition (nearly 100% market share), “sold” <5%

domestic business in 2006• MSN: entry in 2004, distant #2 (~10% share) in instant messaging, not in top 5 in

portal & search• AOL: JV with Lenovo in 2001, FM 365 portal, shut down in 2004, entered again in

2008 & shut down in 2009• Amazon: entry in 2005 by acquiring #2 player Joyo, which has been unprofitable

and losing share• Myspace : entry in 2006 as local company with minority ownership by News Corp.

Going nowhere.• Youtube: sporadically blocked (<5% share), blocked in 2008 (0% share)• Facebook: <5% share, blocked in 2009• Twitter: blocked in 2010• Google : entry in 2005, share went up from 10% to 35%; exited mainland China and

moved to HK in 2010

History of troubled multinational giants:

+

+

= $150B

Internet

The Three Great Powers

Online Clothes Market Share (2009)

Search Engine Brand Awareness in China (2009)

Internet

Community

Games

Portals

Mobile

Competition is heating up rapidly …

Internet© BDA China

“The Chinese Internet is like a gladiatorial, no-holds-barred fight to the death.”

San Jose Mercury News

Amazing stories of Chinese Internet madness …

Kaixin001.com vs. Kaixin.com Tencent vs. Qihoo 360

Internet

Differences in User Demographics

% new users each year: China 25%, U.S. 3%

Average age: China 25 Average age: U.S. 42

Internet

News Search Email IM Music Gaming Blog Ecommerce0%

20%

40%

60%

80%

100%

59% 62%

88%

55% 55%

15%

0%7%

69%

84%91%

39%

18%

39%

5%

61%

Usage Differences between China & U.S.

Data Source: CNNIC, iResearch and www.pewinternet.org

Different Usage of Internet between China & U.S. in 2003

News Search Email IM Music Gaming Blog Ecommerce0%

20%

40%

60%

80%

100%

79% 76%

57%

72%

83%

71%

55%

34%

70%

89% 91%

38%34% 35%

11%

71%

Different Usage of Internet between China & U.S. in 2010

Internet

How is the Chinese Internet different?

• Entertainment centric and content-heavy

• Music is nearly all unlicensed

• Video is heavily (but not richly) monetized

• P2P is extremely popular

• SNS transition from copycat to localized

• Blogging rate is much higher than U.S.

• Mobile will be the explosive growth-catalyst

• E-commerce is ready to shift from C2C to B2C

• Gaming MMORPG flat, casual / social growing

• Cloud computing will create a software industry

10 sec. spent on result page

American Users

30-60 sec. spent on result page

Chinese Users

Internet

Internet Cafés are like “gaming arcades” …

Internet

“rural classroom” “decadence café”

“favorite date”

Internet Cafés of all sorts …

Internet

Limited traditional media = reliance on the Internet

VS

Internet

Portals blend blog & news to increase coverage …

Blog News

Internet

The Chinese Internet phenomena …

• Curious users hungry to explore (less goal-oriented).

• Entertainment-centric & information-overloaded.

• Users eager to have a voice for self-expression.

• Internet is creating best sellers, cultural icons, and brands.

• No up-front payments; pay-per-use and ad-supported-piracy.

• “Do-it-all” Tencent and lack of anti-trust anger competitors.

• MMORPG: virtual fame and glory can be bought.

• 90 后 : a lonely generation with less social development.

• Internet amplifies “angry young” and their nationalism.

• Sichuan earthquake awakened sense of social responsibility.

• Self-righteous citizens providing check and balance.

• Weibo: exposing corruption, enabling civilian ‘paparazzi’.

Internet

“The internet is like a mirror, reflecting our society. If we do not like what we see in that mirror the problem

is not to fix the mirror, we have to fix society.”  Vint Cerf

“Internet is like a mirror” …

Internet

E-Commerce obstacles overcome by Chinese ingenuity!

Lack of Trust

Very Few Credit Cards

Escrow Payment

Bicycle Delivery

Cash on Delivery

Problems Solutions

E-Commerce

E-Commerce Emergence in China

E-Commerce development

• Payment has been solved via escrow, COD

• Logistics problems also solved

• Youth becoming avid online spenders

• Taobao = 50% of packages shipped

• C2C is currently nearly 90% of e-commerce

• B2C rapidly growing, gaining trust

E-commerce Accelerates Advertising

• E-commerce makes advertising measurable & targetable

• E-commerce makes advertising more valuable

In 2009, China E-Commerce Market was US$36 billion (grew 107% from 2008).

It doubled again in the 1st semester of 2010!

E-Commerce

China E-Commerce Analysis & Opportunities

Productsearch, yelp

Microblog& communities

B2B/B2C/C2C Bank, carrier, escrow

Customer Service

SaaS, cloud

User

Pre-purchase search

1 Decision influence2 Shopping3 Payment4 Logistics

& Service5

Platform6Value proposition needs to be clear:

Amazon: 1-6 360buy: 3, 4, 5

Dianping: 1, 2 Taobao: 3, 4, 6

Higher-margin opportunities may emerge in social/entertainment shopping & new Internet brands.

Billion-dollar companies will emerge from in 3, 4, 5; however, low-margin & transaction-oriented.

1, 2, 6 best shows strength of Internet above and most suitable for technology e-commerce companies.

B2C companies need tools & platforms to build site & acquire customers (enabling traditional players).

SNS and crowd-sourcing sites that are not copiable but monetizable, as advertising value increases.

O2O (online to offline) model is a good fit for China, though just copying from US won’t work.

E-Commerce

Mobile Internet Opportunities

• Carriers are betting on Mobile Internet due to ARPU pressure and competition.

• Ecosystem needs devices, bandwidth, applications to create a virtuous cycle.

• Challenges:

• Smart phones are too expensive (US$600 – 1000);

• 3G Bandwidth is still too expensive;

• Yet users are younger (75% of Mobile Internet users are 27 or under) and not rich;

• Apps should focus on entertainment (killing time) not productivity (saving time).

• CMCC (TDS-CDMA)

• CUTC (WCDMA)• CT (CDMA2000)

300 million users & growing 3G deployed Monopoly 3 carriers

Opportunities & Challenges

100M

200M

300M

2006 2007 2008 2009 2010

Mobile

Mobile Internet revealing evolving digital divide …

Hi-endwhite collar

Aspiring young white collar, students

3-Low Users ： blue collar, military, migrant workers

Rely 100% on Phone

No Internet Knowledge

Phone = Cheap Entertainment

Victim to Fraud

Phone + PC

Internet Savvy

Entertainment/Social

Cost Sensitive

Phone augments PC

Top app is Email

Productivity-focused

Cost is no issue

Mobile

Mobile Internet User Segmentation

83% of the users are younger than 30

2000 RMB is important price barrier

(1) High-end users are a small minority.

(2) Must focus on aspiring young users before 3-low users.

(3) Aspiring young users are existing Internet users.

(4) Young users require lower prices.

Observations

Mobile

But what do early-adopter young users want?

Top 10 Desired Apps

Smart Dialer

IM (QQ, MSN)

Localized SMS

Music Player

Games

E-book Reader

Camera & Photo

News & Micro-blogging

Video

SNS (Renren, Kaixin)

Top 5 Android Apps

Web Search

Browser

Email

Maps

Youtube

Mobile

Strategic Projections for Mobile Internet

Basic Tools

Browser, security,

photos, etc.

Entertainment

IM, SNS,Music,Games,Video.

Advanced Apps

E-Commerce, advertising,

LBS, search,email.

Mobile developer community will have many opportunities (AppStore, ads, export, etc.).

Minimal carrier subsidies; but Android devices will drop under 1000 RMB in 2011.

High 3G prices will lead to be “rich-device + minimal bandwidth”.

For next few years, entertainment applications will dominate Chinese mobile Internet.

AppStore/Marketplace model will become primarily freemium; no up-front payment.

Chinese Mobile Internet will evolve the same way as the Chinese Internet

Mobile ecosystem will follow the PC’s horizontal integration pattern.

￥ 5000

￥ 1000

Mobile

• Today Chinese entrepreneurship is in transition.

• Few home-grown role models although gradually a new class of serial entrepreneurs is emerging.

• Entrepreneurship is still a new concept for local graduates – there is peer and family pressure towards ‘secure’ corporate jobs.

• Older generation is risk averse but grass-roots entrepreneurship from young people in their late 20s and early 30s is rapidly improving, especially in the TMT sector.

• A number of Chinese entrepreneurs dubbed “returnees” (from Australia, Europe and especially the U.S.) with prior overseas entrepreneurial experiences are coming back to start their own companies.

Entrepreneurship in China

Entrepreneurship

Founding a Chinese Tech Start-up: the problems

Nascent angel network• Angel investors are few and immature: minimal knowledge

and unreasonable expectations.

• No technical/market understanding to evaluate early-stage.

Home-grown CEOs need mentoring

• Entrepreneurs are often uni-dimensional.

• Limited innovation and imagination.

• Limited business, industry, and operational experience.

Fear of failure by top engineers

• China only started VC-funded start-ups in the late-1990’s.

• The Chinese culture is less tolerant of failure.

• Many engineers and managers are well-paid and risk-averse.

• Difficult to assemble a complete & complementary team.

• Limited access to resources, network, and industry information.

• Information flow is not fluid in China.

Tough to assemble a full teamData Source: Zero2IPO

Angel VC

?

$28B$19B

$7B

US

China

Entrepreneurship

New “Homegrown” Entrepreneurs

程炳皓 (Binhao Chen) ：

• CEO, kaixin001.com

• SINA 1998～ 2008

郭去疾 (Alan Guo) ：• CEO, lightinthebox.com

• Google 2005～ 2008

刘建国 (Jianguo Liu) ：

• CEO, aibang.com

• Baidu 2000～ 2007

汪海兵 (Haibing Wang) ：

• CEO, 51mole.com

• Tencent 2004～2007

陈年 (Nian Chen) ：• CEO, Vancl.com

• Joyo 2000～ 2005

古永锵 (Victor Koo) ：• CEO, youku.com

• Sohu 1999～ 2005

王树彤 (Diane Wang) ：• CEO, DHGate.com

• Microsoft 1993～1999

刘阳 (Sunny Liu) ：• CEO, 51wan.com

• Kingsoft 2001～2006

Entrepreneurship

Giving an opportunity to the new generation …

Entrepreneurship

Setting up a legal entity for a start-up

• If you want to receive offshore (i.e. USD) funds, there are 3 forms of business types available: • Joint venture with a Chinese partner (JVC)

Equity Joint Venture Contractual Cooperative Joint Venture

• Wholly Foreign-Owned Enterprise (WFOE) • Representative Office (RO)

Entrepreneurship

Setting up a legal entity for a start-up

• Before incorporating, any entrepreneur should remember: • Changing the type of business organization is long and costly• Once the venture is declared to make business in a specific industry sector, very difficult to change • There are always grey areas, and the regulations are being updated on a weekly basis.

• Law enforcement in China is weak in many areas, including contract law, IP law, etc.

• Foreign investment in certain sectors is subject to industry-specific regulations.• Telecommunications: the stake of the foreign investors in the telecom enterprise can not be more than

49%.• Insurance: property and personal insurance are possible but companies need permit to engage in large

commercial risk insurance, all-inclusive policy insurance, etc. • However China is compelled by WTO to change its legislation in protected sectors.

• After being issued a Corporate Legal Person Business License, a foreign-invested enterprise (FIE) must apply for registration of foreign exchange with the State Administration of Foreign Exchange (SAFE) at the place of its business registration.

• Chinese entrepreneurs also need to go through SAFE registration for their shares in offshore vehicles (e.g. Cayman Islands or BVI).

Entrepreneurship

IN CHINA

OFFSHORE

Contract

CAYMAN / BVI

HONG KONG

WFOE LOCAL COMPANY

Transfer Pricing

Licenses

Investment

Legal complexity – the “SINA” structure

Entrepreneurship

• Zhong Guan Cun (in Beijing’s northwest corner) is still China’s best approach to a Silicon Valley ecosystem.

• Clear priority to nurture hi-tech innovation start-ups and create an early stage investment environment. Tax incentives’ scheme.

• Surrounded by about 50 universities incl. Tsinghua, Beida and Beihang, over 1,000 research institutes, a software park, 150 incubators and >10,000 hi-tech start-ups.

• “Real-estate minded” incubation, few added value services, no service oriented mentality and lack of expertise / skills required.

Many “incubators” but no real incubation …

Incubation

IW INCUBATION IWDF FUND

Acceleration

Jump-Start

EIR

Angel Series A

IW’s ecosystem … Incubator + Fund

Incubation

100,000 CVs

400 project team members

40 professionals

Exceptional Mentors & Investors

26 projects14 Incubation

8 Angel Round

4 Series A

In 1.5 years …

Incubation

IW’s Mobile Internet Strategy

Cloud ServicesPhone UI FrameworkiTunes-like Client

Mobile Product Portfolio

Market Place Games Platform

Partner with ”Chiwan” companies to grow ecosystem & drive down cost

Develop localized UI and applications targeting young users

Use proven Internet business models, but fit in with carriers

Bet on Android, but not Google experience

Develop ultra-easy-to-use cloud + client apps that conserve bandwidthIncubation

What IW incubated in 2010 …

Talked to over 1,000 start-ups

Incubated 23 companies

Wandoujia / Tongbu - (iTunes)

Yingyonghui - (Getjar)

Tapas Umeng - (Flurry + AdMob) PhotoWonder - (Instagram)

Feihong - (Kik)

Guoguo* - (Qik)

Xingyun- (Zynga)

LeiyooDoodle - (Ngmoco)

X6 / X7 (project codenames)

Black Bubble*Fengkuangbuluo*

Pada*

Buding - (Foursquare + Evite)

Looa

Meishidaren*- (Foodspotting)

Nada*- (Plancast)

Diandian – (Tumblr)

Zhihu – (Quora)

Junren*

Mobile (8) Gaming (8)

SNS (3)E-Commerce (4)

* Jump-Start Program Incubation

(In brackets are products recognizable in other parts of the world, used solely for the purpose of easy reference )

Today, early stage in the U.S. is changing …

• The traditional VC model seems “broken”. Why?• It costs very little to do an internet start-up.• Seed Accelerators (e.g. ycombinator, TechStars, etc.):

Growing in popularity; Efficient use of capital … … despite the high failure rate.

• Superangels (e.g. Ron Conway, Marc Andreessen, Dave McClure, Aydin Senkut, and many others).

• Success based on fast failure, feedback and iteration.• Incremental investment: high-risk, but high-reward.• Big, mature, internet platform companies:

Google, Microsoft, Yahoo, Ebay, Amazon, AOL, Facebook, Apple, etc. Lots of users, lots of money. Outsourcing innovation. Lots of M&A (but small and early).

• Great for angel investors & entrepreneurs …• … not so great for VCs (the returns are not good

enough!).

© Dave McClure

© Dave McClure

Early Stage

Very limited local angel activity in China …

Lei Jun ( 雷军 ):• Vice-Chairman of KingSoft.

• Angel Investor of UCWeb, Vancl, and many other start-ups.

• In last three years, he has helped several companies get more than $150 million in total in follow-up capital.

• Before his involvement, UCWeb could not get funded, now it has two rounds of investment for more than $40 million.

Incubator

VC

Founders

Angels

Western Mindset vs. Local?

Zhou Hongyi ( 周鸿祎 ):• Ex-Yahoo! China GM. Founder of 360 and 3721,

has been called “king of the Internet channels” and “father of malware”.

• Invested in Xunlei, Discuz, Qvod, Kugou, Xunyou, and others.

• Among the top 20 client software companies in China, Zhou's portfolio has 4.

• Xunlei was a late comer compared with FlashGet and underperforming in IDG's porfolio. Zhou picked it out and mentored it to scale. It's now the 3rd biggest client software company in China.

• Already the 2nd largest VC market in the world but still only about 1/4th of the U.S.

• 2008 was a historical high, 2009 a logical correction, 2010 was a real test but … passed with flying colours!

China’s VC market is growing steadily …

Early Stage

Liquidity is abundant!

Early Stage

• A lot of funds initiated during 2008-2009 failed to complete their fundraising until 2010 due to the global financial crisis.

• The frenzied domestic IPO activity and the resulting super-high ROIs diverted even more capital into domestic VC/PE market.

• China's rapid economic recovery in 2010 led to excess liquidity in domestic capital markets, as a result, both oversupplied public money and private capital went into VC/PE funds.

• The current global financial crisis has temporarily slowed down but has not greatly hurt the VC market in China. The fundamentals of the Chinese economy are still strong - investment opportunities are still here.

• There is a major shift from offshore USD funds to domestic RMB funds, from a 70% - 30% split in 2008 to 30% - 70% in 2009. The trend is even more acute in 2010.

The financial crisis has changed the game …

Early Stage

The new name of the game is … RMB funds!

• One of major trends in China's RMB fund market during 2010 was the stepped-up efforts by foreign VC/PE institutions to launch RMB funds.

• The Blackstone Group completed its fundraising for a RMB5 billion, IDG Capital launched a RMB 3.5 billion fund, and the Carlyle Group completed its first closing for a RMB 2.4 billion fund.

• In addition, many institutions, including KPCB China, Sequoia Capital China, and Qiming Venture Partners have also completed their fundraisings for their RMB funds in 2010.

• CLSA Asia-Pacific Markets, in teamwork with Shanghai Guosheng Group, initiated the RMB 10 billion Guosheng CLSA Industry Investment Fund, TPG launched two RMB funds respectively in Shanghai and Chongqing, aiming to raise RMB 5 billion each, and UBS, in collaboration with the Municipal Government of Beijing, is also preparing to establish a RMB fund.

Early Stage

Why RMB funds?

• The ChiNext (launched in 2009) created an effective exit option for RMB funds.

• For as long as investors are being subject to FX capital account controls, RMB funds will be a preferred way for most institutions operating in the Chinese capital markets.

• Strong support from the Chinese government is a contributing factor. For example, Beijing, Shanghai and Chongqing, among others, have rolled out their preferential policies in taxation and FX to foreign RMB funds.

• And the pilot program for establishment of foreign invested equity investment firms recently initiated in Shanghai also carved out more fundraising channels for foreign RMB funds.

• BUT: Legal issues – a lot of regulations (new, neither mature nor tested). Existing funds – predominantly USD and still preferring NYSE / NASDAQ exit. Local governments increasingly act as a direct investor and/or a LP – what are the implications?

Early Stage

• In China, there is very little attention to early stage, furthermore …

• Traditional industries still account for more than 50% of the VC money invested in China.

• Beijing (especially for TMT) is the place to be.

… but where is truly Early Stage?!

Early Stage

Early Stage VCs in China

• The VC in industry in China is at its infancy.

• Vast majority of VCs go for the ‘low hanging fruit’, i.e. later stage, lower risk, higher transparency, pre-IPO type of investments.

• Good and experienced VC investment managers are a scarce resource in China.

• Good and experienced EARLY STAGE VC investment managers are a VERY scarce resource in China.

• Good and experienced EARLY STAGE VC investment managers that: have previous own start-up / operational experience (i.e. ex-founders / entrepreneurs), and

truly work ‘hands-on’ with the team(s) to add value, at least on a weekly basis

are a VERY VERY scarce resource in China.

• On a more positive note, in the past couple of years there is rapid accumulation of top talent in the Chinese VC industry; also overcrowding at the growth stage is bound to bring some people back to early stage.

Early Stage

Early (?) Stage VCs in China

Early Stage

Exits: 2010 was a record year for VC-backed IPOs …

Early Stage

• Lack of domestic IPO exit was one of the most critical obstacles in RMB investment up until the last couple of years.

• However, the stock markets in Shanghai and in Shenzhen continue to rapidly improve especially in terms of shortening post-IPO lock up, transparency, etc.

• Government also launched ChiNext ( 创业板 ), termed as “China’s NASDAQ”, but profitability requirements do not make it very suitable for TMT companies.

• Shenzhen’s SME board has already proved to be an exit option for VC investment in China for potentially more than 10x returns in a period of 3-4 years.

• But in NYSE / NASDAQ not everything is ‘rosy’ (RenRen, Qihoo 360, Dangdang, Youku, etc.).

Rapidly improving local IPO market …

Early Stage

… but where is my trade sale exit?!

Early Stage

Negligible domestic and cross-border M&A activity takes away one of the most important exit routes for early stage technology investors.

• What is innovation? Product (R&D), or Process, or Business Model?

• Is the market mature enough for innovation? Have the basic Chinese consumer needs been already fulfilled?

• More than a government policy or budget. Innovation is about culture and education.

• In China innovation is still predominantly university and government driven.

• Step-by-step process. It took generations for other countries; China will do it faster but it will still take time.

• C2C (Copy-to-China) Micro-innovations Innovation.

Is China innovating?

Innovation

“Shanzhai” phenomenon started with mobile phones….

Innovation

Now spreading to the Internet …

Innovation

But localization / micro-innovation is happening …

Innovation

• It took Sina Weibo 66 days to reach it’s first million users.

• 177 days to the first 10 million, which achieved April 28, 2010.

• Since then the site has reached 100 million registered users it continues to grow at a breakneck pace

• Sina Weibo’s main competitor Tencent Weibo claims to have reached 100 million users a month earlier but quality / traffic are considerably lower.

But localization / micro-innovation is happening …

US China Micro-Innovation

Google Baidu Tieba / Zhidao

ICQ / MSN QQ QQ Show

Yahoo Sina Blog

eBay Taobao Free listings

Amazon 360Buy COD

PayPal AliPay Escrow Payment

Facebook Renren / Kaixin ?

Twitter Sina Weibo Photo / Video, etc.

Groupon 1500 copycats ?Innovation

Marginal but truly innovative features …

Innovation

Based on local needs!

“70% of success in life is … showing up”

Woody Allen

Contact me at:

chris@chuangxin.com

You can also find me at:

http://twitter.com/evdemon http://t.sina.com.cn/evdemon